NSE co-location case: SAT sets aside SEBI’s disgorgement order against exchange

However, NSE will still have to bear the brunt of paying Rs 100 crore to SEBI's Investor Protection Fund on account of its failure to conduct due diligence.

The Securities Appellate Tribunal (SAT) on Monday (January 23) delivered major relief to the National Stock Exchange when it set aside SEBI's April 2019 order directing it to disgorge Rs 1,000 crore for committing violations of stock exchanges and clearing corporation regulations.

In its order delivered on April 30, 2019, the market regulator had directed NSE to disgorge Rs 624.89 crore at 12 percent interest per annum from April 2014 onwards.

However, NSE will still have to bear the brunt of paying Rs 100 crore to SEBI's Investor Protection Fund on account of its failure to conduct due diligence, as per the SAT order.

Additionally, the orders passed against former MD and CEO of NSE, Ravi Narain and Chitra Ramkrishna to disgorge 25 percent of their salaries to the Investor Protection Fund have also been set aside. Narain was asked to disgorge 25 percent of his salary drawn during FY11 to FY13 and Ramkrishna was asked to disgorge her salary drawn for FY14.

Disgorgement refers to the repayment of gains that have been made illegally.

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Simultaneously, the SAT has also set aside the SEBI order barring Ramkrishna from associating with any listed company or market infrastructure institution, or any other market intermediary for five years
For OPG securities private limited, the SAT directed that the disgorgement amount should be recalculated.

Ramkrishna was arrested by the CBI in March 2022, which is close to four years after an FIR was registered by the investigative agency in the scam. Both Narain and Ramkrishna were helming the agency when the co-location scam was underway.

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While Narain is not under arrest as of now, Ramkrishna is lodged in jail for another matter that involves illegal phone tapping of NSE employees. Reportedly, the CBI is currently awaiting permission from the NSE’s board to prosecute Ramkrishna. The investigative agency had sought similar permission from the ICICI Bank board for prosecuting its former MD Chanda Kochhar.

After filing the chargesheet, CBI informed a Delhi court that it was still investigating the case seeking to examine other linkages that might emerge out of the probe.